Prima BioMed to raise funds for cancer trials

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Small biotechnology outfit Prima BioMed is aiming to double its
market capitalisation through a share placement to institutions and
existing shareholders.

Newly appointed executive chairman Eugene Kopp said yesterday
that the placement would aim to raise up to $10 million - which
would be enough money to fund operations for two years.

"I guess $8 million would be enough, but $10 million gives us a
buffer," he said, adding that the money would be spent advancing
trials of ovarian and colon cancer products.

The capital raising comes after the Australian Stock Exchange
raised concerns about the company's financial position. Research
and development activities have cost it about $5 million a year in
the previous two financial years and at the end of July it had
about $2.7 million in the bank.

Prima has appointed Southern Cross Equities to manage the
capital raising and the stockbroker was in Melbourne yesterday
promoting the offer to institutions and sophisticated investors.
Southern Cross Equities' Stuart Roberts would not confirm the size
of the placement but said the offer was discounted to a level that
would make it attractive to investors.

The company's share price was last at 14.5 ¢, giving it a
market capitalisation of $10.7 million. Should the $10 million
target be reached, the 73.8 million shares on issue would probably
double and lead to a significant dilution of the value of existing
shareholdings.

Regardless, Mr Kopp said the offer was also being pitched at
existing large shareholders, including Queensland Investment
Corporation and Bodie Investments, and several had indicated they
were willing to increase their stakes.

Coinciding with the placement, which is expected to be completed
at the end of next week, leading shareholder Peregrine Corporate is
selling part of its 6.84 per cent holding in an off-market
transaction also being handled by Southern Cross. Peregrine agreed
to reduce its stake to less than 5 per cent following the
resignations of its representative directors Bryan Frost and
Richard Revelins.

The placement will aim to raise up to $10 million - which would be enough money to fund operations for two years.

A trading halt on the shares was lifted yesterday after the
announcement that the technology of its subsidiary, Arthron, would
be subject to a six-month validation study by the New York Stock
Exchange-listed AstraZeneca. Prima's share price closed unchanged
at 14.5 ¢.